What are an SMSF Trustees Reporting Duties?
The core of a SMSF’s operations lies in the trustee’s responsibilities to guarantee that reporting duties and obligations are fulfilled.
The trustee plays a key role in keeping the fund out of trouble. They are responsible for ensuring documentation is prepared and maintained to provide timely reports to the Australian Taxation Office (ATO) and, if applicable, to the Australian Securities & Investments Commission (ASIC) if the trustee is a corporate entity. In practical terms these SMSF accounting obligations are generally outsourced to an SMSF specialist firm like ourselves.
Apart from statutory obligations the trustee must report to its members.
What do the ATO want?
Maintain Member and Fund Details
Fund records should include a copy of the fund’s trust deed and any changes, the fund’s investment strategy, trustee minutes, trustee declarations, trustee consents to act, member applications and copies of all reports given to members.
The ATO want to know when changes are made to the fund such as change of trustee, a member exits the fund which can be due to a divorce, death or simply transferring their member balance to another fund, change in contact details or the fund’s postal address.
Member and fund details must be kept, generally, for 10 years. Operational activities such as financial transactions and SMSF annual returns should generally be kept for 5 years.
Prepare Financial Statements & Lodge the SMSF Annual Return (Tax Return)
Prepare the fund’s annual financial statements so the fund can be audited, and the annual return is prepared and lodged. This is vital as the auditor and the ATO use the information from these sources to ensure the SMSF complies with the superannuation laws and regulations (SIS) as well as ensuring the fund’s assets are protected and properly recorded.
If the fund has a tax agent the date of lodging the fund’s annual return is usually 15th May of the following year i.e. for the financial year ended 30 June 2024 the annual return is due 15 May 2025 which can be confirmed via the ATO website.
Appoint a SMSF Auditor
A SMSF auditor must be appointed. The ATO regulates SMSFs and relies on the independent reporting of an auditor to pick up when a fund is going off course or, in more serious cases, misusing the fund’s cash or assets for the member’s personal advantage.
An auditor must provide a report to the trustees within 28 days after receiving all of the information required to complete the audit.
Event-Based Reporting for SMSFs
Generally, event-based reporting relates to reporting when pensions are first established and changes to those pensions so the ATO can regulate how much a member has in pension mode which is limited to their *Transfer Balance Cap (TBC).
*Transfer balance cap (TBC) – the most amount a SMSF member can have in pension phase.
The event must be reported quarterly within 28 days after the end of the quarter in which the event occurs i.e. a pension started on 2 May 2024 must be reported by the 28th of July 2024.
Activity Statements for SMSFs with GST or PAYG Obligations
An SMSF subject to GST are generally required to report (BAS Return) to the ATO quarterly. A fund may have obligations to pay a quarterly or annual PAYG instalment and possibly PAYG withholding.
It is unusual for a fund to have PAYG withholding obligations but is possible in the situation where a spouse under the age of 60 has inherited a pension from an older spouse over 60 who has died.
What Reports Must the Trustee Give to a Member?
The trustee of a SMSF must provide an annual report to a member showing their opening and closing member balances at 30th June, a summary of the member transactions which occurred during the year including contributions and benefits paid.
When a member exits the fund they must be provided with a final member statement.
The member can request a copy of the fund’s trust deed or other documents. However, as the members and the trustees (or directors of the corporate trustee) are the same they should have access to these records anyhow.
Reporting to ASIC
If a SMSF trustee is a company an annual review statement must be lodged with ASIC to confirm or update the details of the directors, shareholders and registered address of the trustee company. Financial reports are not required to be lodged with ASIC. An annual report must be lodged within 14 days of the annual review date which is usually the anniversary of the company’s registration date.
Any changes made during the year to the trustee company structure or to the members or directors must be reported within 28 days of the change.
A SMSF may elect to have a special purpose company which acts solely as the trustee of their SMSF versus a small proprietary company which can be used for other purposes. From the 1st July 2024 a special purpose company annual review fee is $65 compared to the normal ASIC fee for a small proprietary company which is $321.